Eight years of flying Lynx and Gazelle helicopters as an Army pilot has equipped Peter Dilnot, CEO of the newly created waste-to-product company Renewi – an amalgamation of Shanks and Dutch waste specialist Van Gansewinkel (VGG) – with the right attributes for undertaking complex corporate operations. Staying calm under pressure, remaining focused and working as a member of a team are but three of the qualities that have stood Dilnot in good stead, particularly when completion of the merger of the UK and Dutch waste specialists took place at the end of February. Although, as Dilnot is at pains to emphasise, it was not strictly speaking a merger, but technically a reverse takeover.
“VGG is the bigger company, so this has been a reverse takeover in the context of the FTSE. VGG is a large business and historically has a strong footprint and we’ve competed with them for years. Frankly, they have been our number-one acquisition target and we’ve always thought that a merger would make a lot of sense. However, the merger itself is quite unusual as it was a bold move and technically constituted a reverse takeover right in the heart of the Brexit storm, but in terms of its execution, it is a merger,” explains Dilnot.
To give an idea of the difference in revenue between the two companies before the merger was finally signed off, Shanks reported revenues of £615m (circa €720m) in its 2015-16 financial year, while VGG’s preliminary annual revenues for 2016 are €879m. By merging with the Dutch recycler, which was valued at €440m at the closure of the deal, and creating Renewi, Shanks has in effect created a group double its size, and which now boasts some impressive stats. These include 8,000 employees working across more than 250 locations in nine countries – the Netherlands, the UK, Belgium, Germany, Hungary, Portugal, France, Luxembourg and, perhaps rather unexpectedly, Canada.
“Canada is a very interesting market,” says Dilnot as an aside. “While the current diversion from landfill is very low, Canada is pushing hard for more recycling and organics reprocessing. We are servicing three of the major cities, with Vancouver opening a reprocessing plant later this year; instead of creating gas to electricity, the facility will be purifying gas and using it as a fuel to power the city’s collection trucks. It is illustrative of what we want to do: turn waste into product.”
An emphasis on innovation
Converting discarded materials into new products is at the very core of the new group, where the ‘i’ at the end of Renewi stands for ‘innovation’. Indeed, it is already engaged in projects with major manufacturers. This includes partnering with Philips to produce a vacuum cleaner made from 36% recycled plastic, working with Miele to deliver cast iron for washing machines, producing bricks from ashes formed by incineration and creating packaging from crop waste.
When was the idea of a merger between the two companies first mooted?
“I first met the former CEO of VGG three months after joining Shanks, which was five years ago, and there was a clear view on both sides to join forces,” recalls the CEO. “Clearly, we competed hard in the market, but we held the view that if the timing was right, the two companies would make a good fit.”
However, like the path of true love, the process has not been without its challenges. When VGG was first put up for sale, Dilnot and his team felt the business was worth less than its debt, so the Dutch company was restructured, and then the process to merge was restarted in 2016.
“We’ve had Brexit along the way, plus the antitrust clearances that needed to take place in the Netherlands, where it took a long time to get done. The authorities exercised their right to study the deal, and our market share was strong in the Netherlands. It just took a while to get there.” The CEO pauses before adding: “Genuinely it has taken real clarity of strategic purpose, resilience and, at times, a bit of ingenuity and creativity to get where we are today.”
Following the merger, and in order to achieve greater economies, will there be
Dilnot again: “The rationale for the merger is primarily around growth. There are parts of the business that overlap, but many parts of the business that complement each other. VGG is strong in logistics, while our strength lies in processing. There are positive synergies and we will be implementing plans, but the vast majority of employees will not be affected. You have to be clear about the process and communicate it clearly to everyone in the group. The key for the vast number of employees, who have shown a positive enthusiasm about the merger, is that we are ‘better together’. VGG was owned by private equity where the future of the company was unsure, whereas they see the merger with Shanks as an opportunity to join a company that has long-term views and it is all about serving society well. For Shanks, it is a chance to increase breadth and scale.”
Waste no more
The new group has enthusiastically embraced VGG’s slogan ‘waste no more’.
And according to Renewi’s website: “We believe ‘waste’ is a state of mind. It is not waste in our hands: it is a produce, an opportunity, and a small part of our planet preserved. By giving new life to used materials, we are the connecting link. Above all, we are the pragmatic face of sustainability.”
Pie in the sky? Not according to the group’s CEO.
“Our new brand is right at the heart of the circular economy, what we do is worthwhile for society and, critically, diverting from landfill and avoiding the use of finite materials,” emphasises the CEO. “This is not pie in the sky, it’s doing it day in and day out. It underpins what we do and gives people purpose. It has social context and is a noble cause.”
With the merger now behind them, what are Renewi’s plans for supplying more recycled materials to manufacturers such as Philips and Miele? “There is an increasing drive for extended producer responsibility,” states Dilnot. “In our business across Europe, and in the Benelux region in particular, we have deep relationships with companies and we are exploring ways to bring materials back into the supply chain. There are more projects in the pipeline with companies looking for partners to do the right thing.”
Finally, is the new group still committed to its UK market? Dilnot’s reply is an unequivocal “yes”.
“Our business in the UK is focused in servicing local authorities on long-term contracts, and is different in the Benelux, which is commercial-based. In the UK our absolute focus is diversion from landfill and we want to bring innovation into the longer term contracts, increase diversion and introduce savings.
“It is a challenge, but the way we can influence the waste-to-product sector is by performing extremely well and playing our part in supporting organisations like the ESA. We are unusual as we are a UK-listed company with an important footprint here but operating at the heart of Europe, so in terms of people and revenue, I believe we could play a constructive role in sharing best practice.”
Having successfully overseen the merger, does Dilnot have plans to use his M&A expertise elsewhere?
“I am absolutely passionate about the company we’ve created – it’s not just me, it’s a huge team, and it’s my privilege to lead the company going forwards. I’m really encouraged and determined to deliver on the merger’s promise.”
Fact file: Peter Dilnot's CV
Before joining Shanks in 2012 as chief executive officer, Dilnot was a senior executive at Danaher Corporation, a global industrial business listed on the NYSE. He held a number of progressive general management roles, including president of Danaher Middle East, group president emerging markets, and president EMEA and Asia of its Gilbarco Veeder-Root subsidiary. Before Danaher, Dilnot spent seven years at the Boston Consulting Group (BCG) in London and Chicago, working with industrial and pharmaceutical clients, and was a leader in BCG’s global sales and marketing practice. His earlier career, after graduating from RMA Sandhurst, was spent as an officer in the British Armed Forces. He originally trained as an Army helicopter pilot and saw active service with both NATO and the UN.
Five things I can't live without...
Family and friends: I never get to spend enough time with them
My loyal dog: Yorkie is a yellow lab and he’s always pleased to see me
Running: I spend a lot of time on the road and my running shoes are always in my suitcase
Fresh air: I take huge energy from fresh air and being outside
Going fast: Whether it is windsurfing or cycling